Opinion-the Abolition of the coronavirus restrictions in Russia will give a more strong rebound of consumption in June — Recap

МНЕНИЕ-Отмена коронавирусных ограничений в РФ даст более уверенный отскок потребления в июне -- РенКап

MOSCOW, June 30 (Reuters) – the Gradual withdrawal of coronavirus restrictions in Russia will give a noticeable increase in consumer demand in June, and the re-introduction of large-scale quarantine measures looks highly unlikely even in the case of the second wave of the pandemic to write a review of Sofya and Andrey Donets Melaschenko, economists at Renaissance Capital in Russia and the CIS.

The main impact of the Russian economy survive in the second quarter, when the decline may reach 10% in annual terms, estimated earlier, the Central Bank. Forecasts for the second quarter deteriorated after the disappointing results may.

“While the further decline in industrial production (to 9.6% yoy in may from 6.6% in April) was expected, because in the first place, it was caused by the effect of the transaction OPEC+, no improvement in retail sales was for us the main negative surprise,” writes RenCap.

The latter contrasted with the current performance, including data of the Central Bank of Russia and the largest banks on financial flows.

Analysts admit that the official statistics might be underestimating the real consumption through online trading and “shadow” non-food trade.

“We expect a significant growth in consumer demand in June, followed by recovery of the market of services (in April–may decreased by about 40% yoy) amid weakening of quarantine restrictions,” – said in the review.

Banks reported the statistics on the card where Russians spend the most, which showed an increase spending on goods and particularly for services, in particular, after the opening of beauty salons and fitness clubs.

July 1 will be the date of the withdrawal of most of the quarantine restrictions in Russia and the early cancellation of some stimulatory fiscal measures.

“Given the additional easing of monetary policy, we believe that the overall balance of measures of the state policy in the direction of supporting economic activity – which has already started to recover in June and in the second half of 2020,” said analysts.

Due to prolonged transition period of the stimulating fiscal policy, in their opinion, will continue to have a strong positive effect on economic growth until 2021, and the folding of some support measures will be offset by the abolition of quarantine restrictions and a more lenient monetary policy.

In the medium term strategy of fiscal policy priorieties at encouraging investment and diversifying sources of income in the long-term decline in oil revenues, they conclude.

(Elena Fabrichnaya; Editor Ekaterina Golubkova)

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